The net asset value of investment funds in Bermuda dropped by almost $80 billion during 2008, according to the latest statistics released by the Bermuda Monetary Authority (BMA).

The BMA's Regulatory Update for March 2009 revealed that the total value of funds held on the Island declined by 31 percent from $249.88 billion in the first quarter of 2008 to $171.19 billion in the fourth quarter, representing the lowest figure since $158.18 billion in 2004, as redemptions continued to be made, funds were wound up and portfolios decreased in value as a result of adverse global market conditions.

The total number of funds also fell by 12 percent from 1,315 to 1,133 over the same period, again at its smallest number for four years, when it reached 1,076 in 2004.

Meanwhile loans continued to outstrip deposits, with the deficit between the two increasing from 118.7 percent deposit liabilities lent in the opening quarter of last year to 127.5 percent for the final quarter, as the Bermuda dollar loan demand was driven by US dollar deposits.

Deposit liabilities totalled $3.7 billion in the first quarter of 2008, rising to $3.8 billion in the fourth quarter, while loans, advances and mortgages amounted to $4.4 billion in the first quarter, climbing to $4.9 billion in the fourth quarter.

Other highlights included net foreign currency remaining in deficit from $107 million in the first quarter to $292 million in the fourth quarter, with liabilities exceeding assets.

The report also showed a steady downward trend for the Bermuda Stock Exchange Index, as it fell approximately 30 percent during the course of last year and 14 percent over the fourth quarter, despite total market capitalisation rising by about $5 million in the final quarter of 2008 to $226 billion by December 31, 2008.

Elsewhere, overall the balance sheets of Bermuda's banks contracted during the fourth quarter and over the year as a whole, mainly as a result of decreases in investments as the economic crisis took hold, with total deposits sliding by seven percent $1.45 billion to $19.4 billion over the fourth quarter, as loans and advances increased to 39 percent of total assets in Q4 from 30 percent over the same period in 2007.

In terms of insurance, 15 new re/insurance companies were set up on the Island during last year's fourth quarter, down from the 21 that established in Bermuda in the final quarter of 2007, reflecting soft market conditions and the financial challenges faced worldwide, but up on the first three quarters of 2008.